IRS official: If an individual fails to show insurance coverage, refund could be withheld

Apr 16 2010

"The Internal Revenue Service won't audit you to make sure you have purchased health insurance under provisions of the new health-care law—but it may withhold your tax refund if you can't demonstrate that you are insured, an IRS official said Thursday," The Wall Street Journal reports. "There are tools we can use. We obviously will be notifying folks [for whom there is no record of health insurance] that we have these questions," Steven T. Miller, IRS deputy commissioner for services and enforcement, said during a Senate Finance Committee hearing, the Journal reported. "We have a refund offset mechanism in order to enforce that provision."  Senate Finance Committee Republicans "questioned whether the IRS will even have the ability to make sure the insurance mandate is enforced." But, as the new law is written, insurance providers will be required to provide documentation to both the taxpayer and the IRS to show that individual has coverage. "The IRS will use document matching to identify people without coverage, and will notify those taxpayers that they may owe penalties." The law does not permit the IRS to issue liens or levies for penalty collection, but Miller said it also does not stop the IRS from cutting a tax refund to obtain penalties (Vaughan, 4/15).

Meanwhile, Kaiser Health News provides a touch of health policy humor with "Tax Day," a political cartoon by John Deering.